The Biden administration warned American consumers about the risk of medical credit credits, saying high interest rates could worsen the financial burden on patients.
The Consumer Financial Protection Bureau (CFPB) issued a report Thursday that found people paid about $1 billion in deferred interest payments for health care charges using medical credit cards from 2018 to 2020. The watchdog agency also found that, when people use medical credit cards, their medical payments can shoot up by about 23 percent after accruing interest.
“Our research suggests that many patients — specifically those who are unable to pay off a deferred interest product during the promotional period — can pay significantly more than they would otherwise pay,” the report reads.
CFPB also noted that these medical cards are often promoted in healthcare providers’ offices and have replaced the low-cost financing and payment plans that many providers offered directly to patients. They added that many patients who sign up for the cards could actually be eligible for financial assistance or other assistance that the providers are required to offer under local, state or federal law.
The agency said that patients may not even realize that they have signed up for a credit card at the doctor’s office — instead believing it is a direct payment plan offered by their provider. When patients are then accrue interest on those credit cards, CFPB said patients can often face more financial hardship than if they did not sign up for the credit card.
Complaints submitted to the agency confirmed that some patients were unaware that they had signed up for the card, saying that providers opened up a credit card in their name, according to the report.
“Consumer complaints to the CFPB suggest that, rather than benefitting consumers, as claimed by the companies offering these products, these products in fact may cause confusion and hardship for some of their patients,” the report read.